The US economy was showing "broad-based signs" of recovery, but consumers and small businesses remained cautious, he said.

The strength of the US economy is a key issue, with all eyes on when the US Federal Reserve will end its massive bond buying programme.

Questions about when the Federal Reserve might tighten policy have worried markets since the end of May, when chairman Ben Bernanke first hinted at the end of the programme.

"I think most banks are concerned with near record surges in currency and interest rate volatility," Larry McDonald, senior director at Newedge USA, told the BBC.

"That's the big concern right now - much more than the London whale in the past."

Housing impact

Wells Fargo, the biggest US mortgage lender, saw profits rise from $4.4bn to $5.27bn on revenue that barely changed at $21.4bn.

Provision for bad loans fell 64% to $652m.

"The consumer loss levels have improved rapidly due primarily to the positive momentum in the residential real estate market, with home prices improving faster and in more markets than expected," said Wells Fargo's chief risk officer Mike Loughlin.

Analysts had been watching for the bank's results to see how higher interest rates - and a potential slowdown in loans - were affecting business.

Mortgage rates have been on the rise since May, and 30-year rates reached a two year high on Thursday.

While revenues were flat, mortgage applications rose 4.2% compared with the first quarter of 2013 - suggesting that higher rates and the prospect of the Fed winding down its stimulus programme were not affecting consumer demand.